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Buying a home and having a roommate

I'm sure this question has been asked before, but I can't seem to sift thru the search results to find exactly what I'm looking for. Hopefully someone will be kind enough to answer what is likely the umpteenth time this question has been asked :) I bought a house last year, and recently acquired a roommate. He's a coworker who wanted to be closer to work, and didn't much care for his former roomies anyway. We pretty much share the house equally (it's a two bedroom) and all utilities. I pay 2/3 the mortgage, he pays half (he can't afford anything more than that). We split the utilities evenly. Should I report any of this as income? It comes to about $6000/yr. If so, how do I report it? I've seen bits and bobs about a schedule E talked about, so far, but that means little to me. Is this situation to my advantage tax-wise, or to my detriment? (ie, have I made a bad tax situation for myself by acquiring a roomie?) Thanks for any advice!

Tyler

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The roomie is not paying 1/3 of the mortgage. He is not liable for it, and is not getting and equity in your home for it. He pays you rent. The 'right' way to handle this is to claim the rent as income (even the utility money) and take expenses as though a fraction of the house is a rental property. Schedule E is the form you use to handle the numbers. The first year you do it, it's awful, but then it becomes second nature, as it's nearly the same each year. You 'must' also take depreciation on the rental portion of the house. The percentages are easy for a two family home, for renting a room, you may want to do some research. Tax-wise, you have more income, so will pay a bit of tax, in the end you will benefit from renting a room that would otherwise be empty. JOE

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joetaxpayer

The half of utilities paid by each of you is personal expenses, not taxable. The money he contributes toward the mortgage, assuming he isn't getting any ownership, is taxable rent. (Likewise for real estate taxes.) Seth

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Seth

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